2014 Full Year Results

Transcription

1 2014 Full Year Results February 4, 2015

2 Safe harbor This document contains forward-looking statements, which can be identified by terminology such as expect, would, will, potential, plans, prospects, estimated, aiming, on track and similar expressions. Such statements may be subject to risks and uncertainties that could cause the actual results to differ materially from these statements. We refer you to Syngenta's publicly available filings with the U.S. Securities and Exchange Commission for information about these and other risks and uncertainties. Syngenta assumes no obligation to update forward-looking statements to reflect actual results, changed assumptions or other factors. This document does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer, to purchase or subscribe for any ordinary shares in Syngenta AG, or Syngenta ADSs, nor shall it form the basis of, or be relied on in connection with, any contract therefor. 2

3 2014 business highlights Fourth quarter sales up 12% Full year integrated sales: 6% CER Integrated sales up 7% excluding glyphosate ELATUS sales in Brazil exceed $300m Double digit growth in emerging markets for fifth consecutive year BRL RUB AOL Adverse currency and mix effects: profitability below expectations UAH Accelerating Operational Leverage program on track to deliver savings Growth at constant exchange rates (CER) 3

4 ELATUS : Syngenta s largest and most successful launch Sales over $300 million; total invoiced ~$380 million Market share gain in fungicides Expected Solatenol approvals : corn, wheat, specialty in USA : cereals in EU Peak sales potential raised from >$500m to $1bn Source: EMBRAPA Circular Technica 103; Syngenta analysis 4

5 2014 integrated business update by region North America: -6% Delayed US season; reduced insect pressure Canada: lower cereals acreage, flooding Lower corn acres; strong growth in soybean AGRISURE VIPTERA maintained at ~30% portfolio Europe, Africa & Middle East: +11% Developed and emerging market growth: CIS resilient Rapid expansion of HYVIDO barley New SDHI fungicides in Western Europe Latin America: +9% Sales up 15% ex glyphosate Successful ELATUS launch Strong performance despite delayed season Insecticide growth: caterpillar pressure Asia Pacific: +10% Broad-based growth: notably South Asia, China, Australasia AMISTAR expansion in China Vegetables integrated protocols Growth at constant exchange rates 5

6 Integrated offers: global strategy adapted by region North America Focus on reinforcing CP leadership Seeds: focus on distinctive traits, seeds advisors Integrated offers: - Water+ Intelligent Irrigation - AGRIEDGE EXCELSIOR Global leader in CP Broad seeds portfolio Crop-based strategies Europe, Africa, Middle East SDHI fungicides gaining ground: Solatenol launch to come HYVIDO barley expansion: paving the way for hybrid wheat Market leadership in sunflower seeds pulling CP sales Latin America Marketing excellence Asia Pacific High yield soybean solutions; ELATUS Ongoing focus on higher margin products Integrated pest management; new AVICTA registration Further share gain in sugar cane * Preliminary data 2014: share gain in 3 of 4 regions* Rice and vegetables protocols tailored to smallholder needs Corn: Start Right solution, traits expansion 6

7 John Ramsay Chief Financial Officer

8 2014 financial highlights Group sales: $15.1bn 3% 5% CER Volume +2% Price +3% EBITDA up 1% at $2.9bn, margin 19.3% - CER margin 20.0% Net income $1.6bn, 2% lower EPS* up 1% at $19.42 Dividend up 10% to CHF per share Free cash flow before acquisitions $1.2bn Cash flow return on investment 11% * Fully diluted basis, excluding restructuring and impairment 8

9 Sales progression full year 2014 * Includes TOUCHDOWN and CIS price: ~$150m 9

10 EBITDA full year 2014 Variable compensation (115) Pension 130 Associates and JVs (41) Bad debt / Other (47) Seeds costs 240 Fixed production costs (110) Other (20) Excluding restructuring and impairment * Excludes TOUCHDOWN and CIS price 10

11 Regional performance: EAME, North America Europe, Africa and Middle East North America Sales Operating income Operating margin Favorable weather increasing crop protection intensity Lower volumes: late US season, acreage and flooding in Canada EU neonicotinoid suspension Focused price action in CIS Lower corn acres adversely affect portfolio mix Partial offset from reduced seeds costs Operating income and margin exclude restructuring and impairment 11

12 Regional performance: Latin America, Asia Pacific Latin America Asia Pacific Sales Operating income Operating margin ELATUS first year success TOUCHDOWN volumes reduced Insecticides growth in Brazil Price increases to offset currency depreciation Challenging rice market in ASEAN Strong growth in high margin vegetables Operating income and margin exclude restructuring and impairment 12

13 Lawn and Garden: EBITDA margin sustainably above 20 percent Growth in Turf and Landscape Lower Flowers sales in developed markets - North America late spring - subdued Eurozone consumer environment Currency impact on reported margin 190 basis points: CER 23.3% Business streamlining success - margin target achieved ahead of schedule 13

14 Crop protection: full year sales up 6 percent (ex glyphosate up 8 percent) Selective herbicides +3%: strong growth in EAME corn and cereal herbicides offset weakness in North America Non-selective herbicides -4%: TOUCHDOWN reduction, GRAMOXONE volume and price gains Fungicides +17%: ELATUS target achieved, SEGURIS growth Insecticides +10%: Broad based growth with high insect pressure in Brazil; North America lower Seedcare -6%: VIBRANCE expansion offset by lower sales to other seed companies, EU neonicotinoid suspension Sales of new products $640m Growth at constant exchange rates Excludes Other (2014: $154m) 14

15 Seeds: full year sales up 2 percent (ex acquisitions and divestments up 3 percent) Corn and Soybean +4%: - acreage shift from corn to soybean - DURACADE first sales Diverse Field Crops +4%: - strong HYVIDO seeds sales - lower sunflower acreage in SE Europe Vegetables -5%: - excluding DULCINEA divestment +6% - emerging market expansion - solid growth in North America and Western Europe CRW royalty income: 2011 $50m, 2012 $256m Growth at constant exchange rates 15

16 Net income and earnings per share $m Operating income Net financial expense Taxation 2,311 (217) (311) 2,265 (200) (323) NFE: increased hedge volume, emerging market currency volatility Tax rate 15% 15% Tax rate unchanged Restructuring* Net income (168) 1,619 (141) 1,644 Restructuring slightly higher, first AOL charge $63m before tax Earnings per share $19.42 $19.30 Excluding restructuring and impairment, EPS on a fully diluted basis * Net of tax 16

17 Free cash flow Year end % of sales Inventories 32% 38% Accounts receivable 24% 23% Accounts payable 23% 26% Trade working capital 34% 35% * Investment in fixed tangible and intangible assets 17

18 Increasing cash return to shareholders Proposed dividend increase: +10% in CHF, +6% in USD** Net debt to equity 27% Flexibility for acquisitions Tactical share buybacks Commitment to progressive dividend policy * Fully diluted basis, excluding restructuring and impairment ** Converted at end January exchange rates All years restated to reflect pension accounting adjustments 18

19 Currency movements: dollar appreciation, CIS weakness Short: - CHF ~13% costs, ~1% sales - GBP ~5% costs, ~2% sales - BRL local costs: sales largely dollarized Long emerging markets: - CIS ~5% sales, <1% costs EUR ~20% sales: balanced exposure with seasonality Outlook 2015: estimated currency headwind $100m excluding CIS * Sales-weighted basket of emerging market currencies excl. BRL, UAH, RUB 19

20 Raw material costs: oil price impact 2014 Crop Protection COGS: $6.3bn Up to 12 month lag in oil price pass through Estimated sensitivity: $10 movement in oil price ~$30m EBITDA impact Limited benefit in 2015 Estimated 2016 benefit at current oil prices: ~$150m, offsetting CHF appreciation 20

21 2015 guidance on EBITDA drivers Sales Costs Savings Currency Volume and mix broadly unchanged Seeds / raw material cost benefit ~$100m Savings: $265m (including $75m from prior program) All currencies except CHF weaker vs. USD Price increases partially offsetting emerging market currency depreciation Cost inflation similar level to 2014; growth investments lower Non-repeat of pension benefit Impact of CHF appreciation limited by hedging Sales at CER EBITDA 2014 level Substantial free cash flow generation 21

22 Accelerating Operational Leverage program to drive margin Seeds production cost optimization Procurement and manufacturing fixed cost reductions Simplified marketing structure Integrated demand and production management Field development rationalization Outsourcing of standard activities * Includes existing program savings: $75 million in

23 Crop Protection: mix effects to drive margin improvement Margin drivers to 2018: Ongoing reduction in solo glyphosate - ~$150m in both 2015 and further growth in higher margin glyphosate mixes ELATUS scale-up; fungicide pipeline Excludes Seedcare on Syngenta seeds (~$90m gross profit) Product line margin at budgeted standard cost 23

24 Seeds: substantial scope for margin improvement Margin drivers to 2018: Maximizing distinctive corn traits in North America, expansion in Latin America and APAC Scaling up Soybean in Latin America: business partner model, new insect trait DFC: sunflower high value genetics, native trait weed control solutions Leading Cereals platform Continued growth in Vegetables Includes Seedcare on Syngenta seeds (~$90m gross profit) 24

25 Mike Mack Chief Executive Officer

26 Long term market growth potential : low crop prices, low investment Emerging market productivity drive gathered pace from 2006 Growing need to manage resistance Exceptional crop production levels in 2013 and

27 Emerging markets are key to future growth >50% sales in emerging markets EAME, APAC: expansion achieved without diluting regional margins Broad portfolio and tailored offers - APAC: rice, vegetables - Eastern Europe: cereals, sunflower - Latin America: soybean, specialty, sugar cane Managing volatility key to business success: currencies, credit Significant yield gaps vs. developed markets - technology adoption, intensification CAGR as reported 27

28 Integrated sales by crop Key crops 2014 Sales (bn) CER % change vs Pipeline target Cereals % ~2.8 Corn 3.4-4% ~5.5 DFC % >2.2 Rice % ~2.0 Soybean % ~4.0 Specialty % ~4.0 Sugar cane 0.3-2% ~2.0 Vegetables % >3.0 Integrated sales % of 8 crops on track for pipeline target in 2020 Cereals, Soybean: strong 2014 performance driven by innovation Corn: acreage decline in Longer term trait expansion, resistance management, emerging markets DFC, Vegetables: diverse seeds portfolio, integrated offers Rice, Specialty, Sugar cane: targets stretched based on progress to date $25bn target: achievement expected post

29 New and pipeline products: $700m increase in peak sales Cereals and DFC Corn Rice Soybean Vegetables and Specialty Peak sales SEGURIS >$150m ~$500m CLARIVA >$200m Solatenol FORTENZA ~$1,000m >$400m >$250m Oxathiapiprolin >$100m New fungicide >$300m Already launched Launches to come 29

30 Outlook Focus on above market growth and higher profitability AOL Integrated strategy driving above market growth: - new products - emerging market presence AOL program: margin improvement, working capital management 24-26% EBITDA margin target for 2018 maintained Strong cash flow: increasing cash returns 30

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